KERALA Kerala...Kerala: Unravelling the Growth Trajectory 7 Kerala is a state on the southwestern...

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March 2020 KERALA UNRAVELLING THE GROWTH TRAJECTORY KERALA KNOWLEDGE PARTNER

Transcript of KERALA Kerala...Kerala: Unravelling the Growth Trajectory 7 Kerala is a state on the southwestern...

March 2020

KERALA UNRAVELLING THE

GROWTH TRAJECTORY

KERALA

KNOWLEDGE PARTNER

Kerala: Unravelling the Growth Trajectory2

1

2

Kerala: An Overview 6Demographics 9

Literacy Rate 9

Human Development Index 9

Economic Drivers 10

# Foreword 4

Kerala and its Peer States: A Quick Comparison 18Gross State Domestic Product (GSDP) 19

Kerala State Sector’s BCG Matrix 20

Key Socio-economic Factors: Comparison between States 22

Government Policies 24

3Kerala: Milestones on the Path of Growth 28Foreign Direct Investment (FDI) 30

Understanding Kerala’s Educated Unemployment 32

Increased Focus on Healthcare and Tourism 37

Mapping the Start-up Ecosystem in Kerala 40

Policy Initiatives to Enhance Ease of Doing Business in Kerala 47

NRI Remittances: The Backbone of Kerala’s economy 50

Kerala: Unravelling the Growth Trajectory 3

4The Real Estate Sector and Future Possibilities 52Real Estate Sector of Kerala: Untapped Potential 53

Future Possibilities 59

• New-age construction technologies: changing the way you build 59

• Alternatives: An Untapped Opportunity for Kerala 60

5 Key recommendations 66

Kerala: Unravelling the Growth Trajectory4

ForewordKerala, a historical state with a rich culture, natural resources, and tremendous future potential. Steeped in several centuries of the spice trade, the state’s economy continues to be dominated by this rich tradition. Though the decadal population growth of 4.9% is the lowest in the country, Kerala tops the charts on various parameters such as the highest literacy rate of 93.91%, ranks highest in the human development index with a score of 0.784 and accounts for 19% of the NRI remittances in the country. The southern state has also exhibited unparalleled resilience to keep its economy on the growth path in spite of the devastating floods in 2018.

Though the state’s contribution to the national economic exchequer is only 3.98%, the socio-economic fundamentals are robust. A comparison with major states indicates that Kerala is a leader in essential infrastructure and is supportive of human development. Social protection is also an important factor where the state excels. These factors have been enablers for the state to grow continuously despite several impediments such as transportation, warehousing, public administration, and utility services along with low volumes of foreign direct investments in the state.

The industrial policy and the recent MSME Facilitation Bill of 2019 are strong indicators of the state government’s intent to develop and promote manufacturing. The falling rank in ease of doing business has been duly considered and we see efforts concentrated to revive the same.

Anuj PuriGroup Chairman

Kerala: Unravelling the Growth Trajectory 5

Tourism is currently a major industry and economic driver in the state. Blessed with numerous attractions ranging from the backwaters to hill stations and beaches, the state has been successful in attracting tourists from national and international shores. Ayurveda and alternative medicine have shown immense possibilities that had earlier remained unexplored. A focus on optimisation of this segment along with tourism is capable of opening up new avenues of the wellness leisure industry. This is likely to create opportunities for the health care, services, and hospitality sectors.

Focus on construction, manufacturing, and transportation continues as evident from budgetary allocations. These sectors are capable of generating significant employment within the state that can potentially reduce the migration of the workforce. Kerala also has the second-highest unemployment in the country at 11.4%. There is an immediate need for the creation of employment opportunities. Along with these focus sectors, Kerala is also promoting the start-ups and MSMEs to participate in the growth of the state.

All these efforts are expected to create a favourable impact on the real estate sector of the state. Kerala is home to two budding smart cities that are capable of rebuilding the skyline of the state. Kochi and Thiruvananthapuram have continually shown an appetite for mid and high-end residential real estate assets and have held the pricing firmly. The state is also ready for newer assets such as student housing and senior living owing to favourable demographics.

A collaborative approach with the participation of multiple stakeholders is likely to unlock myriad possibilities for Kerala which can help the state to reach the zenith of its potential.

Kerala: Unravelling the Growth Trajectory6

Kerala: An Overview1

Kerala: Unravelling the Growth Trajectory6

Kerala: Unravelling the Growth Trajectory 7

Kerala is a state on the southwestern Malabar Coast of India. It was formed on 1st November 1956 under the States Reorganization Act, by combining various Malayalam speaking regions. Spread over 38,863 sq. km., Kerala is one of the smallest Indian states (in area terms). It is bordered by Karnataka to the north and northeast, Tamil Nadu to the east and south, and the Lakshadweep Sea to the west. From an administrative perspective, Kerala is divided into 14 districts with the capital being Thiruvananthapuram. Malayalam is the most widely spoken and official language of the state.

Kerala: Unravelling the Growth Trajectory 7

Map not to scale. For representation purpose only.

Kerala: Unravelling the Growth Trajectory8

In the 15th century, the spice trade attracted Portuguese traders to Kerala and paved the way for the European colonization of India.

At the time of the Indian independence movement in the early 20th century, there were two major princely states in Kerala-Travancore State and the Kingdom of Cochin.

• They united to form the state of Thiru-Kochi in 1949. The Malabar region, in the northern part of Kerala, had been a part of the Madras province of British India, which later became a part of the Madras State post-independence.

• After the States Reorganization Act, 1956, the modern-day state of Kerala was formed by merging the Malabar district of Madras State (excluding Gudalur taluk of Nilgiris district, Topslip, the Attappadi Forest east of Anakatti), the state of Thiru-Kochi (excluding four southern taluks of Kanyakumari district, Shenkottai and Tenkasi taluks), and the taluk of Kasaragod (now Kasaragod District) in South Canara (Tulunad) which was a part of Madras State.

Kerala has been a prominent spice exporter since 3000 BCE.

3000 BCE

15th Century

20th Century

MILESTONES

Kerala: Unravelling the Growth Trajectory 9

DEMOGRAPHICS

HUMAN DEVELOPMENT INDEX

LITERACY RATE

So

urce

: Uni

ted

Nat

ions

Dev

elo

pm

ent

Pro

gra

mm

e (U

ND

P)

So

urce

: Cen

sus

2011

So

urce

: Cen

sus

2011

KERALA 93.91%

MAHARASHTRA 82.91%

TAMIL NADU 80.33%

GUJARAT 79.31%

PUNJAB 76.68%

KARNATAKA 75.60%

INDIA 74.04%

Kerala’s literacy rate has improved by 305 basis points (bps) in the past decade which is comparatively lesser than its peers due to a high base.

860POPULATION DENSITY

Persons/ km2

More then 2x of the Indian national average of 370 persons per km2Decadal

Growth Rate4.9%India average 17.6%

33.4 MillionKERALA’S POPULATIONThe state is home to 2.76% of India’s population

0.784KERALA

0.774CHANDIGARH

0.708TAMIL NADU

0.664TELANGANA

0.682KARNATAKA

0.749LAKSHADWEEP

0.764GOA

0.721PUNJAB

0.667GUJARAT

0.695MAHARASHTRA

0.60 0.80

1st

3rd

8th

15th

21th

22th

18th

11th

4th

2nd

# RANKEDSCORE OF HDI

Kerala: Unravelling the Growth Trajectory10 Kerala: Unravelling the Growth Trajectory10

Kerala possesses tremendous resources to promote the state as a tourism destination. Kerala’s culture and traditions coupled with varied demographics have made the state the most popular tourist destination in India. “In 2012, Kerala became the number one travel destination in Google’s search trends in India leaving the Taj Mahal behind”. Kerala’s beaches, backwaters, mountain ranges, palaces, religious places, wildlife and bird sanctuaries are major attractions

for tourists domestically and internationally. Until the early 1980s, Kerala was a relatively unknown destination compared to other states in the country. In 1986, the Kerala government identified and declared tourism as an important contributor to the economy and became the first state to do so. Due to its picturesque locations, it is often termed as “God’s Own Country”. In 2012, the National Geographic magazine named Kerala as one of the “ten paradises of the world”.

Tourism

ECONOMIC DRIVERS

Tourism in Kerala has grown by nearly 149% between the 2006-2018 period. Domestic travelers in Kerala have accounted for the largest share in inbound tourism, however, their share has come down from 94% in 2006 to 93% in 2018. International travelers have witnessed a faster growth rate compared to domestic tourists in the state. International tourists have witnessed an annual growth of 8.1% between 2006 to 2018 compared to the 7.9% growth of domestic tourists during the same period.

Tourism in Kerala has grown sharply over the last 12 years, but natural calamities like the floods and epidemics such as bird flu made a dent on the overall tourism scenario. Compared to 2006-2012 period, the growth rate in Kerala’s tourism has seen a marginal impact between 2012-2018 period.

Source: Kerala Tourism Statistics, ANAROCK Research

6.30.4

2007

6.6

0.5

2008

7.6

0.6

2009

7.9

0.6

2010

8.6

0.7

2011

9.4

0.7

2012

10.1

0.8

2013

Tourist Inflow of Kerala

10.9

0.9

2014

11.7

0.98.4% CAGR

7.4% CAGR

2015

12.5

1.0

2016

13.2

1.0

2017

14.7

1.1

2018

15.6

Domestic Tourists Foreign Tourist

Millions

2006

1.1

Kerala: Unravelling the Growth Trajectory 11

Major Hill Stations

Thiruvananthapuram

Kollam

Thiruvalla

Alappuzha

Kochi

Guruvayur

Malappuram

Palakkad

Munnar

Periyar National Park

Kozhikode

Thalassery

KannurPayyanur

Kasaragod

Thrissur

Temple

Palace

Major Back waters

9

Major Beaches

Wildlife Sanctuaries

Major Bird Sanctuaries

Source: ANAROCK Research

Kerala: Unravelling the Growth Trajectory 11

Kerala: Unravelling the Growth Trajectory12

Kerala’s seasonality compared to other destinations is very different. When other places witness huge dip during the non-peak seasons and have a heavy inflow of tourists during the peak seasons, Kerala’s delta between peak and non-peak tourism

is smaller compared to other destinations. Kerala has been witnessing tourism all-round the year with heavy traffic during the last quarter of every year which is generally looked upon as the holiday season across the globe.

Seasonality of tourism in

Kerala

Source: Kerala Tourism Statistics, ANAROCK Research Note: *Any discrepancy in total figure is due to round-off

Q1 Q2 Q3 Q4

24%24%

24%24%

23%25%

2013

2014

2015

2016

2017

2018

23%

23%

23%

23%

24%

26%

22%22%

23%

23%23%

21%

31%

31

%

30

%30%30

%27%

Q4

Peak

Perio

d

Q2 to Q

3 Non P

eak

Perio

d

Kerala: Unravelling the Growth Trajectory 13

Kerala has a total of 19 ports/terminals of which 1 major, 14 minor, 3 intermediates and 1 international seaport (major port) is under construction at Thiruvananthapuram. Liquid bulk, dry bulk, dry cargo, and crude & its other products are the major products handled by the ports in Kerala.

The presence of these ports in Kerala provides them with an enhanced advantage over the other ports in India due to their close proximity to the east-west trade route. Today,

nearly 45-50% of India’s trade is transshipped over hub ports such as Colombo, Salalah, and Jebel Ali, despite additional cost and transit time due to transshipment. The presence of ports in Kerala near the east-west trade route gives it a strategic advantage which no other state in India enjoys. Once the new port gets operational at Thiruvananthapuram, Kerala, the hub ports such as Colombo, Salalah, and Jebel Ali will face added competition due to the upcoming port’s strategic location across the east-west trade route.

Ports

Kasargod

Azhikkal

Mappila BayThalassery

ChombalPuthiyappa

KozhikodeBeypore

Ponnani

Munambam

Cochin

Alleppey

Neendakara

ThangasseryMuthalapozhi

Trivandrum

Vizhinjam

Q2 to Q

3 Non P

eak

Perio

d

Map not to scale. For representation purpose only.

Major1

Minor14

Intermediates3

International1

Ports/Terminals

19

Kerala Major and Minor Ports

Fishing Harbour

Port

Kerala: Unravelling the Growth Trajectory14

Suez

AdenSocotra

Mina AI Ahmed

Kandla

276NM

126NM

740NM

Mumbai

CochinTuticorin

Singapore

Colombo

Chennai484NM

11NM

76NM33NM

20NM

608NM

Located 11 nautical miles off the Middle East trade route and 76 nautical miles off the Suez route, Cochin’s proximity to these trade routes makes the India Gateway Terminal attractive as a hub to

the vessels operating in this route. With the upcoming major port in the capital city of Kerala, Thiruvananthapuram, the entire transshipment scenario of Kerala is expected to touch greater heights.

India’s transshipment terminals

Kerala: Unravelling the Growth Trajectory14

Kerala: Unravelling the Growth Trajectory 15

Suez

AdenSocotra

Mina AI Ahmed

Kandla

276NM

126NM

740NM

Mumbai

CochinTuticorin

Singapore

Colombo

Chennai484NM

11NM

76NM33NM

20NM

608NM

Major ports in India handled 699.05 million tonnes of cargo during fiscal 2019. Cochin port during the same period handled more than 4.6% of the overall cargo handled by all the major ports in India. Between fiscal 2008 and fiscal 2019, Cochin port witnessed a 6.65% CAGR growth compared to India’s growth of 2.74% CAGR over the same period.

Another major port known as the Vizhinjam Port at Thiruvananthapuram was expected to start operations

by end of 2019 but will be functional by October 2020. It is estimated to handle additional 1.41 million tonnes of cargo by 2022. The addition of this port will open trade doors for India for the cargo which is now being handled by other global peers such as Salalah (Oman), Al Fujairah (UAE), Colombo, Singapore and West Port/Malaysia.

2005-06

2006-07

2007-08

2008-09

2009-10

2010-11

2011-12

2012-13

2013-14

2014-15

2015-16

2016-17

2017-18

2018-19

2019-20*

13.915.315.815.5

17.417.9

20.119.9

20.921.622.1

25.029.1

32.022.1

Cochin Port traffic

Cargo traffic (Million tonnes)

Note: * Data till November 2019Source: Cochin Port Trust, ANAROCK Research

Kerala: Unravelling the Growth Trajectory16

The operating ratio of Cochin Port has significantly decreased over the last 6 years while the operating incomes have grown significantly. It indicates that the Cochin

port trust is able to gradually improve on their operational efficiencies and lower the expenses indicating improved performance of the port.

Financial Performance of Cochin Port

0

20

40

60

80

100

120

0

100

200

300

400

500

600

2013-14 2014-15 2015-16 2016-17 2017-18 2018-19*

Operating Income (INR crore) Operating Ratio (%)

362.

54

385.

83

437

.25

49

6.2

3

526

.79

475

.53

106

95

84

7469.71

64.74

Note: * up to January 2019Source: KSIDC, ANAROCK Research

Kerala: Unravelling the Growth Trajectory 17

Kerala plays an important role in the exports of the nation by exporting spices and marine products. Major items of trade are cashew, coir and coir products, tea, coffee, pepper, cardamom, ginger, other spices, spices oil, marine products, machinery, chemicals, coal, fertilizers, and raw materials.

The total export of Kerala accounted for US$ 9.77 billion during 2019. During 2019-20, till September 2019, the exports stood at US$ 5.09 billion. During 2018-19, India’s total export touched nearly US$ 330 billion. Kerala contributed to nearly 3% of the overall exports from India.

Kerala: The Spice and Commodity Export Hub of India

While tourism, exports and ports are key drivers of the economy of the Kerala, there are several channels and means to add the necessary impetus by leveraging the state’s inherent strengths and core areas of excellence.

Note: * data till September 2019.Source: Directorate General of Commercial Intelligence and Statistics (DGCIS), ANAROCK Research

Export trend (US$ billion)

2014-15

4.16

2015-16

4.36

2016-17

4.89

2017-18

7.31

2018-19

9.77

2019-20*

5.09

Kerala: Unravelling the Growth Trajectory18

Kerala and its Peer States: A Quick Comparison2

Kerala: Unravelling the Growth Trajectory18

Kerala: Unravelling the Growth Trajectory 19Kerala: Unravelling the Growth Trajectory 19

Kerala accounts for nearly 4% of India’s GDP. Kerala’s Gross State Domestic Product (GSDP) grew at 6.8% in 2017-18 in constant (2011-12) prices, which is higher than the 6.2% growth recorded in 2016-17. The growth rates of Gross State Value Added (GSVA) at basic prices in constant (2011-12) prices were 5.94% and 4.67% in 2017-18 and 2016-17, respectively.

In 2017-18, the contribution from primary, secondary, and tertiary sectors to the GSVA at

constant prices (2011-12) was 10.85%, 27.40%, and 61.75%, respectively.

The GSDP growth in the manufacturing sector was 9.2% in real terms in 2017-18. The corresponding figure was 7.8% in 2016-17. The GSDP of the secondary sector rose to 13.7% in 2017-18 from 4.81% in 2016-17. The tertiary sector GSDP recorded a growth rate of 3.4% in 2017-18; the corresponding figure in 2016-17 was 5%.

GROSS STATE DOMESTIC PRODUCT (GSDP)

The state’s economy is highly supported by sectors such as tourism, construction, real estate services, and construction (includes real estate, roads & highways, ports, railways, etc.). Together these three sectors account for nearly 50% of the state economy. However, not all these sectors are

growing at the same pace as the others. To understand the key sectors on which the economy is riding and other sectors for which the governing bodies need to re-plan their strategies, depicted below is the BCG (Boston Consulting Group) matrix.

1990-91

0.1

2000-01

0.6

2009-10

1.8

2016-17

4.8

2017-18

5.1

INR lakh crore

GSDP Kerala (at constant prices)

Note: 2017-18 Kerala GSDP value is quick estimatesSource: Economic Review of Kerala 2018, ANAROCK Research

Kerala: Unravelling the Growth Trajectory20

Ind

ustr

y G

row

th R

ate

Market Share

Note: The above calculations of market share are based on five-year average (2011-12 to 2016-17) as stated in the economic survey and growth of the sectors is CAGR for the same period.Source: ANAROCK Research

• Manufacturing

• Mining

• Financial Services

• Public Administration

• Public Utility

• Transport & Warehousing

Question Mark

Dog• Agriculture

• Real Estate

Cash Cow

• Tourism

Star

KERALA STATE SECTOR’S

BCG MATRIX

>15% share0-15% share

0-5

% C

AG

R>5

% C

AG

R

?

Kerala: Unravelling the Growth Trajectory 21

Kerala is one of the smallest states in India, yet it ranks 11th in terms of GDP contribution to the overall economy. It has the potential to increase its contribution to the national economy given the rich and diverse economic drivers latent within the state. There is a need to channelize the governance and

policy support to steer the economy towards holistic development. It is the right time for the government to step up its efforts and react in a manner that looks beyond tourism and uplift the overall growth in Kerala which will also improve its contribution significantly over the next decade.

Contribution of each state to the Indian economy

RANK STATE GDP CONTRIBUTION AREA (LAKH SQ KM)

1 Maharashtra 15.09% 3.07

2 Tamil Nadu 8.34% 1.30

3 Gujarat 8.13% 1.96

4 Uttar Pradesh 8.05% 2.43

5 Karnataka 7.39% 1.92

6 West Bengal 5.43% 0.88

7 Rajasthan 4.91% 3.42

8 Andhra Pradesh 4.55% 1.62

9 Telangana 4.23% 1.12

10 Delhi 4.23% 0.02

11 Kerala 3.98% 0.39

12 Madhya Pradesh 3.89% 3.08

13 Haryana 3.59% 0.44

14 Punjab 2.92% 0.50

15 Bihar 2.68% 0.94

16 Odisha 2.67% 1.56

17 Chhattisgarh 1.71% 1.35

18 Assam 1.66% 0.78

19 Jharkhand 1.61% 0.79

20 Uttarakhand 1.34% 0.54

21 Himachal Pradesh 0.85% 0.56

22 Jammu & Kashmir 0.84% 2.22

23 Goa 0.43% 0.04

24 Tripura 0.24% 0.11

25 Chandigarh 0.22% 0.001

26 Meghalaya 0.18% 0.23

27 Puducherry 0.17% 0.005

28 Manipur 0.14% 0.22

29 Nagaland 0.13% 0.16

30 Sikkim 0.13% 0.07

31 Arunachal Pradesh 0.12% 0.84

32 Mizoram 0.11% 0.21

33 Andaman & Nicobar Islands 0.05% 0.08

Note: J&K is not divided into its newly formed UT’s i.e. J&K and LadakhSource: ANAROCK Research

Kerala: Unravelling the Growth Trajectory22

Kerala and states such as Maharashtra, Karnataka, Telangana, Tamil Nadu, Haryana, Gujarat, and Punjab are some of the key economic contributors to the Indian economy. To compare the strength of each

state through the prism of socio-economic factors, we have identified a few key parameters which will help us assess the overall performance of each state. The key parameters identified are:

KEY SOCIO-ECONOMIC FACTORS: COMPARISON BETWEEN STATES

Essential Infrastructure

Social Protection

Transparency & Accountability

Fiscal Management

Economic Freedom

Support for Human Development

Kerala: Unravelling the Growth Trajectory 23

These six sub-parameters along with few other social parameters such as crime, law and order, welfare of women and children, environment, and delivery of justice assessed by Public Affair’s Index (PAI 2018) has ranked each state/UT in India based on their index score of 1.

We have assessed each of these Indian states on these 6 major parameters to understand if the needs of its residents are met by each state and have made life for the residents easier.

Performance index

Kerala is a leader in essential infrastructure and human development as it provides an adequate infrastructure to its population along with education and healthcare facilities. However, it lags when it comes to transparency & accountability and economic freedom compared to its peers. Strong intervention by the government is required to uplift the overall economic scenario of Kerala. The untapped potential the state offers needs to be revisited and tackled in a manner to ensure streamlined growth.

STATE KL PB TN GJ KA MH HR TS

Essential Infrastructure 0.641 0.633 0.630 0.624 0.603 0.596 0.584 0.426

Social Protection 0.516 0.548 0.511 0.490 0.401 0.444 0.430 0.549

Transparency & Accountability 0.429 0.439 0.384 0.429 0.650 0.468 0.615 0.476

Fiscal Management 0.433 0.372 0.401 0.402 0.481 0.426 0.423 0.769

Economic Freedom 0.384 0.396 0.427 0.752 0.494 0.638 0.494 0.587

Support to Human Development

0.649 0.483 0.539 0.417 0.469 0.482 0.426 0.501

Note: indicates laggard and indicates leader of the set. KL-Kerala, PB-Punjab, TN-Tamil Nadu, GJ-Gujarat, KA-Karnataka, MH-Maharashtra, HR-Haryana, TS-TelanganaSource: Public Affairs Index 2018, ANAROCK Research

Kerala: Unravelling the Growth Trajectory24

The Government of Kerala intends to transform the state into a vibrant one with flourishing industries and thriving entrepreneurial ecosystem that will provide inclusive and sustainable economic growth. It aims to encourage private investments in all sectors and create an enabling environment by improving the infrastructure through the PPP mode.

The state of Kerala has infrastructure in place for the growth of the MSME sector. Nearly 50% of the population is engaged in the rural sectors which plays a pivotal role in the social and economic development of youth and backward people. The state employs nearly 18 lakh workers in the manufacturing sector. It is interesting to note that only 20% of these

workers are employed in organized units and around 80% find employment in the rural or unorganized sector. Power is no longer a constraint in the state as the availability of power has been increased by 30%. This makes Kerala ready for rapid industrialization.

The manufacturing sector in the state contributes 7.5% of the GDP and generates nearly 14% of the employment. To build a stable economic foundation, the government has developed a robust policy that incentivizes investments and promotes entrepreneurship. According to Kerala Industrial and Commercial Policy 2018, the below key parameters are identified to uplift the industrial output of the state:

GOVERNMENT POLICIES

• Electronics Hardware Park at Amballur, Ernakulam.

• State-of-the-art Electronics Incubator at Infopark, Cochin.

• Defence Park for high-end defence/aerospace/electronics at Palakkad.

• Electronic manufacturing cluster at Kakanad.

To fuel growth in the electronics sector, the following infrastructure facilities are to be developed

• Goods manufactured by MSMEs located in the state will be allowed price preference of 15% in purchases by government departments and state PSUs.

• Government departments and PSUs purchasing goods and services from MSMEs shall be required to make payments within 45 days of acceptance of supplies.

• MSMEs registered with NSIC under a single point vendor registration scheme shall be facilitated by providing them tender forms free of cost, exempting from payment of earnest money during purchases by all government departments and state-owned PSUs.

Government’s support to MSME

Exemption of stamp duty/ registration fees for allotments.

of the statutory employer contribution for additional employees joining post 31st Mar 2017 will be borne by the Government for 3 years.

Multipurpose Industrial Zones

100% 75%

Kerala: Unravelling the Growth Trajectory 25

• The government has also passed MSME Facilitation Bill 2019. The key highlights of the bill which will be used to promote MSMEs in the state are:

• The bill passed in the assembly in November 2019 allows setting up of enterprises in the state where the investment is less than INR 10 crore, except in the red category of the State Pollution Board, will not require any prior license from the state government.

• The individual will have to submit an affidavit to the Industries Department through Single Window clearance

system. However, after three years, the company will have to get all the licenses necessary to run a business.

• The move aimed at improving ease of doing business in the state where the entrepreneurs can start their venture and not have to juggle with the compliance procedures in the initial days.

• The government will provide the matching contribution of 20% of the total project cost towards setting up common facility

centres in the State under MSE-CDP (Micro & Small Enterprises - Cluster Development Programme) Scheme

Industrial Cluster Development

• Start-ups: KSIDC will extend seed fund assistance to innovative ventures/potential start-ups promoted by young entrepreneurs, subject to a maximum of INR 25 lakh per venture or 90% of the initial cost of the project, whichever is lower.

• Sector-specific mentoring sessions will be conducted for young innovators across various sectors. Start-ups coming under

the Start-up India scheme will be given an extended period of one year over and above the Central Government scheme.

• Non-Resident Keralites (NRKs): The government will provide training and facilitation for the rehabilitation of NRKs coming back from abroad through capacity building for enterprise creation. 5% of the allottable area in industrial estates will be reserved for them.

Entrepreneurship Development

• The Industries Department will take the lead role in developing a Logistics Hub in the commercial capital of the State i.e. in Kochi spread across 100 acres. This

hub will be the nerve centre for all the activities relating to transport, logistics and goods distribution, both for national and international transit.

Logistics Sector

• Coir: Ensure 200 days of work for coir workers in a year

• Cashew: More than 3 lakh women are employed in 800 cashew factories in the

state. The government plans a massive plantation scheme to increase supply.

Other Sectors

Kerala: Unravelling the Growth Trajectory26

Kerala aspires to achieve an economic growth rate of 10% in the future and is aware of the scale of transformation that is required to attain this goal. The industrial sector is expected to lead the change and the policies drafted for the same are expected to spur growth. The main objective will be to ensure

environment-friendly financial growth, a high level of skill development and respectable employment opportunities. To achieve this, there will be a need for productive forces such as science, technology, agriculture and industrial, that will enable and aid the industrial growth of the state in the future.

The government is more focused on providing services and amenities to tourists and has laid out policies to create autonomous bodies and councils at district level to ensure smooth functioning of the industry.

Types of Tourism to be developed

I. General interest tourism for the masses in situations that can sustain large scale tourist inflow

II. Quality tourism with strictly controlled development aiming at high expenditure tourist markets in places that are ecologically sensitive to large tourist inflows

Tourism Policy

• Investment subsidy limited to 10% subject to a ceiling of INR 10 lakh.

• Only approved units will feature in the Tourism Department’s publicity material and will be eligible for any concessions and incentives offered by the government.

• Concession in electricity charges with five-year tariff subsidy for the following types of tourism:

I. Classified hotels (1 to 5-star, 5-star deluxe, heritage)

II. Motels (approved by Department of Tourism, Government of Kerala)

III. Restaurants (approved by Classification Committee of Government of India)

IV. Amusement parks & recreation centres (approved by Department of Tourism, Government of Kerala)

V. Rope ways at tourist centres

VI. Institutions teaching surfing, gliding, trekking and similar activities, which promote tourism (approved by Department of Tourism, Government of Kerala)

VII. Ayurveda centres with tourism potential (approved by Tourism Dept, Govt of Kerala)

VIII. Heritage homes (approved by Tourism Dept, Govt of Kerala under Grihasthali scheme)

The tourism units which undertake expansion/modernisation after five years of availing concessional tariff, will be eligible for concessional tariff for a further period of five years for the additional electricity charges paid by the unit due to expansion/modernisation.

Incentives and Subsidies for Tourism Projects

Kerala: Unravelling the Growth Trajectory 27

Ayurveda and medical tourism have emerged as a favourite among tourists. This is a unique opportunity for Kerala with hardly any competition from other states. This segment of tourism and alternative medicine or wellness has tremendous potential to catalyse the economic growth. To promote this segment the government has already set forth some basic guidelines:

• Strengthen the approval system and introduce a classification system to grade Ayurveda centres based on the quality of facilities and services.

• Allow only Ayurveda centres approved by the tourism department to function at tourism centres in the name of tourism.

Any attempt to promote industrial or manufacturing activities in the state will augur well for the economy. However, focus on the rubber and coir industries can be leveraged with a specific focus to incentivise or attract industries and investors to these segments.

Tourism, with more emphasis on medical or wellness needs to be institutionalised. There is a need to encash the opportunity that the state possesses naturally by the virtue of its rich heritage.

The desired impact of the state’s policies is to create an enabling environment for the economy to grow. To achieve this effectively, employment generation initiatives should be considered across all avenues. Increased employment aids in fortifying the economy of the state by inducing spending and at the same time creates a demand for real estate assets.

Kerala: Unravelling the Growth Trajectory28

Growth Enabling Sectors: An Overview3

Kerala: Unravelling the Growth Trajectory28

Kerala: Unravelling the Growth Trajectory 29

Kerala state’s growth depends on multiple factors such as education, healthcare, tourism, real estate, etc. These factors can be supported by the development of a policy framework to make the state attractive to foreign investors and funds. While the government has taken many initiatives to promote development in the region, the outcome of these initiatives has not been very fruitful. ANAROCK research has assessed key factors that can give the economy of Kerala a boost and also impact the national economy as a whole.

Kerala: Unravelling the Growth Trajectory 29

Kerala: Unravelling the Growth Trajectory30

Foreign direct investment is a form of investment in which a foreign company can invest in a company in another country by means of gaining ownership in the entity/project. It is distinguished from a foreign portfolio investment by a notion of direct control. The origin of the investment does not impact the definition, as an FDI: the investment may be made either “inorganically” by buying a company in the target country or “organically” by expanding the operations of an existing business in that country.

With an aim to promote global investment inflows into the country, the central government has relaxed the FDI norms significantly over the last few years in India. The government allows FDI inflow through two different routes viz; automatic and the government route.

Under the automatic route, the government has allowed the foreign investor to directly invest without the prior approval of the government. While in the second route, the investor needs to take government approvals before investing. In most sectors the government has allowed an automatic route of investments, but the sectors/companies that are controlled by the government generally need to take government approvals before investments.

The following sectors are prohibited to get investments in the form of equity from foreign companies:

• Lottery business including government/private lottery, online lotteries, etc.

• Gambling and betting including casinos etc.

• Chit funds

• Nidhi company

• Trading in Transferable Development Rights (TDRs)

• Real estate business or construction of farmhouses (Real estate business does not include the development of townships, construction of residential /commercial premises, roads or bridges)

• Manufacturing of cigars, cheroots, cigarillos, and cigarettes, of tobacco or of tobacco substitutes

• Activities/sectors not open to private sector investment e.g. Atomic Energy and Railway operations (other than permitted activities)

In the last two decades (April 2000-September 2019), India has witnessed a total FDI equity inflow of US$ 446.12 billion according to the Department for Promotion of Industrial and Internal Trade. The service sector which includes financial, banking, insurance, non-financial business, outsourcing, R&D, courier, technology testing and analysis has been the major beneficiary of FDI in India during this period.

78,605

41,263

37,106

25,310

25,165

23,518

17,229

16,279

15,776

14,584

Computer software & hardware

Telecommunications

Construction development (real estate)

Trading

Automobile industry

Chemicals (other than fertilizers)

Drugs & Pharmaceuticals

Construction (infrastructure activities)

Services sector**

Power

FOREIGN DIRECT INVESTMENT (FDI)

17.6%

Share in total FDI

April 2000-2019 (US$ million)

%

9.2%

8.3%

5.7%

5.6%5.3%

3.9%

3.6%

3.5%

3.3%

Shar

e o

f To

p 1

0 S

ecto

rs

Att

ract

ing

FD

I

Note: ** Services sector includes Financial, Banking, Insurance, Non-Financial / Business, Outsourcing, R&D, Courier, Technology Testing and AnalysisThe data of financial year 2019 data is only for the April-September period

Source: Department for Promotion of International and Internal Trade, ANAROCK Research

Kerala: Unravelling the Growth Trajectory 31

Historically, FDI in the real estate sector was not allowed except for NRIs and overseas corporate bodies. In 2005, the RBI issued a notification and the housing, township, built-up infrastructure and construction development sector was opened for 100% FDI with certain terms & conditions. While

the sector started getting FDI in 2005, today it’s the 4th biggest sector to attract FDI in the country. The total FDI into the real estate sector since then has been US$ 25,310 million and accounts for nearly 5.7% of the total FDI received in the country till September 2019.

Top 10 Cities’ Share of FDI in India

Note: The data of financial year 2019 data is only for the April-September periodSource: Department for Promotion of International and Internal Trade, ANAROCK Research

Jaipur

Kochi

Chandigarh

Kolkata

Hyderabad

Ahmedabad

Chennai

Bengaluru

2,048

2,373

2,3935,850

18,981

24,006

31,196

42,320

0.5%

Share in total FDI%

0.5%0.5%

1.3%

4.3%

5.4%

7.0%

9.5%20.6%

29.3%

New Delhi

91,812

Mumbai

1,30,706

April 2000-2019 (US$ million)

Kerala: Unravelling the Growth Trajectory32

The four key sectors which contributed nearly half of the Kerala’s economy have got a budget allocation of just 13% in 2020-21. For these sectors to flourish, the government needs to open doors for alternate funding in the form of PE/VC or FDI. When the

dependence on private funding for these sectors increases, the government will be able to shift focus to other sectors and increase their budgetary allocations to enable them for private investments in future.

Back in 1817, the Queen of Trivandrum issued a royal decree that read, “The state should defray the entire cost of the education of its people in order that there might be no backwardness in the spread of enlightenment.’ She hoped education would make her people’ better subjects and public servants.”

Since time immemorial, Kerala has always given high importance to education. So much so that, the state has the highest proportion of literate persons among the Indian states. As per Census 2011, the effective literacy rate in Kerala is 93.91%1. With a continuous focus on education, the literacy rate in the state has improved significantly.

1http://spb.kerala.gov.in/images/pdf/whats_new/Vol1_E.pdf

UNDERSTANDING KERALA’S EDUCATED UNEMPLOYMENT

The majority of FDI inflow has been in Mumbai and New Delhi and together these cities account for nearly 50% of FDI inflow in India. Kerala’s FDI inflow during the last two decades (April 2000 - September 2019) has been US$ 2.37 billion. As per RBI data released in March 2019, the ease of doing business which is a major factor for attracting foreign players has been declining in Kerala. From a score of 22.87 in 2015, with an all India rank of 18, the score improved to 44.82 in 2017 but during the same period, the ranking of ease of doing business of Kerala dropped

to 21st place. Other states in India grew at a much faster pace by establishing processes and strengthening their existing framework. While Kerala has applied and is applying multiple reforms, the implementation of these reforms has been a problem in the state making it difficult for foreign investors to invest their money into projects/entities in India. For the state to increase its share in the overall FDI in India, there is a dire need to set up new policies and accelerate the entire process for investors to gain trust in the state.

Agriculture & allied services 411.14 12%

10%Industries (Manufacturing) 496.54

9%Transportation 501.09

15%Construction 224.78

Budget allocation (INR crore) GSDP Contribution (%)

(20

11-1

2 to

20

16-1

7 av

erag

e)

(20

20

-21

B.E

)

Budget Allocations for Key Sectors Vs Economic Contribution

Source: Budget 2020-21, Economic Surveys.

Kerala: Unravelling the Growth Trajectory 33

The chart below clearly indicates that even the districts with the lowest literacy rate in Kerala (Wayanad- 89.32% and

Palakkad-88.49%) fare better than the national average of 74.04%.

The state’s focus on literacy can be gauged from its annual expenditure for the sector. For FY 2020-21, the state has estimated expenditure of about INR 20,862 crore for education, an increase of 8.2% as against 2019-20 (INR 19,275 crore). Now, when

compared to other sectors such as irrigation (INR 1,167 crore), medical and public health (INR 9,295.96 Crore), or public works (INR 5,084.42 crore), the budget allocation for education is significantly higher.

Growth in Literacy Rates of Southern States (1991-2011)

Comparing Kerala’s 2 Districts with Highest & Lowest Literacy Rate with India

Source: Census 2011

Source: Census Data

Kerala89.8190.86

93.91

Andhra Pradesh44.1 60.5 67.7

India52.21 64.83 74.04

Karnataka56 66.6 75.4

Tamil Nadu62.66 73.47 80.33

1991

2001

2011

Highest Literate Districts Lowest Literate Districts

Palakkad88.49

Kottayam96.4

India74.04

Pathanamthitta96.93

Wayanad89.32

Kerala: Unravelling the Growth Trajectory34

Increased focus on education has helped Kerala secure the top spot in the Education and Empowerment Index with a score of 0.972.

The index value is calculated based on participation in education for the 6-18 age group using attendance data, data for early marriage of women, and child sex ratio. Kerala’s focus on empowerment, education, and healthcare have made it socially advanced state, which is clearly indicated in the below table. Not to mention, Kerala has also maintained its top rank among the Indian states in terms of performance on the Human Development Index (HDI).

Education and Empowerment Index

STATE INDEX VALUE RANK

Kerala 0.978 1

Tamil Nadu 0.737 2

Karnataka 0.696 3

Telangana 0.616 4

Maharashtra 0.615 5

Andhra Pradesh 0.529 7

Despite Kerala’s immense focus on education, the state has not yet been able to provide its literate population with enough career opportunities. Kerala has an unemployment rate of 11.4% which is higher than the Indian average of 6.1%. Among all states, only smaller states such as Sikkim, Tripura, Goa, and Himachal Pradesh have a higher unemployment rate than Kerala.

13,098 14,560

17,406 19,043 19,441 19,275

20,862

-

5,000

10,000

15,000

20,000

25,000

2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21(BudgetEstimate)

Exp

end

itur

e (I

NR

Cro

re)

Trends in Total Expenditure on Education (2014-15 to 2020-21 BE)

Source: State budget documents, ANAROCK Research

2Public Finance for Children across 16 Indian States by the Centre for Budget and Policy Studies

Source: Public Expenditure on Children In India: Trends and Patterns

Kerala: Unravelling the Growth Trajectory 35

If we look closely in terms of educational qualification, about 37.8% have secondary to higher education, while 29.1% have a degree and above. This clearly indicates that due to a lack of job opportunities within the state, people with higher education levels migrate to other countries in pursuit of better career prospects.

However, being educated is surely beneficial. It allows many from Kerala to find work elsewhere - in other Indian states and

countries. In 2018, there were 21,21,887 emigrants from Kerala across the world3. According to Emigration and Remittances: New Evidences from the Kerala Migration Survey, 2018, the highest emigration is in the Gulf region with 89.2% of the total migration. An additional 10% of the emigrants are concentrated in other countries like the USA, UK, and Australia, etc. This explains why Kerala accounts for highest inward remittances (19%) in the country.

The money sent back home forms the backbone of Kerala’s economy. In that sense, maybe, literacy can be considered as the State’s chief asset and it is time that Kerala capitalized on the high literacy to enrich the intrinsic value and reduce dependence on remittances.

Note: Excluded UTs and North-Eastern States

3.3CHHATTISGARH

8.6HARYANA

4.5ANDHRA PRADESH

4.8GUJARAT

7.8PUNJAB

13.9GOA 4.8

KARNATAKA

9.7DELHI

11.4KERALA

4.6WEST BENGAL

7.7JHARKHAND

4.5MADHYA PRADESH

Top 6 States with lowest Unemployment Rate

Top 6 States with highest Unemployment Rate

3EMIGRATION AND REMITTANCES: NEW EVIDENCES FROM THE KERALA MIGRATION SURVEY, 2018

Map not to scale. For representation purpose only.

Kerala: Unravelling the Growth Trajectory 35

Kerala: Unravelling the Growth Trajectory36

Lack of employment opportunities in the State has, undoubtedly, resulted in a high rate of unemployment in Kerala. Apart from remittances, agriculture, and tourism, other sectors including manufacturing or IT-ITeS have not really created a massive impact on the overall employment generation in the state. However, the government has taken this into cognizance and is trying to emulate the success of adjacent southern states.

The challenge before the state government is to offer gainful employment to the youth of the State. To address this, the government aims to create an enabling environment for entrepreneurship in the state. Kerala Government seeks to create a new generation of job providers rather than job seekers4.

For the same, the government has launched the Kerala Start-Up Mission (KSUM). There are some green shoots as the state holds the first place in the ‘start-up promotion ranking’ in 2018, according to the Union Ministry of Commerce. Till 2019, there were about 2,200 start-ups across various sectors in the State.

However, for some start-ups, scarcity of capital is the biggest issue. To address this, the state government, in its 2020-21 Budget, announced three crucial measures. These include:

• Loans without asset security will be given to the start-ups that have received work orders from government semi-government or major corporate firms. A scheme is being announced for providing 90% of work order as loan, up to a maximum of INR 10 crore at an interest rate of 10%.

• An amount of INR 73.50 crore is earmarked for Startup Mission in 2020-21. The budget allocation has come down from INR 80 crore in 2018-19.

• Addressing the issue of the high stamp duty in the State for starting a company, the government has decided to include the problem in the Finance Bill to examine and rationalise the rates. This is expected to attract companies to set up base in Kerala.

Further, the state government envisages expansion of the IT-ITeS industry in a manner that benefits all the districts. A hub and spoke model have been planned. Thiruvananthapuram (Technopark), Kochi (Info Park) and Kozhikode (Cyberpark) will act as hubs, and the remaining districts will be the spokes. These three IT parks together have more than 800 companies that provide employment to over one lakh tech professionals.

• Technopark is extensively laid out across 724 acres of land in 5 phases, with 9.7 million sq. ft. of built-up space. It has both IT SEZ and DTA areas within the campus.

• Infopark has a total built-up area of 6 million sq. ft.

• Cyberpark a combined built-up area of 8 lakh sq. ft.

An additional space of 10 million sq. ft. is targeted to be developed by 2021 in the IT parks to meet the growing demand from companies.

If we delve deeper, it can be inferred that except Technopark in Thiruvananthapuram, the other two tech parks are occupied by smaller players in the industry. A closer look at Technopark’s occupiers suggests that it is home to reputed companies such as Tata Elxsi, Tech Mahindra, Tata Consultancy Services, Oracle, Infosys, H&R Block, Ernst & Young, Quest, and Allianz.

Additionally, a programme for giving employment (Local Employment Assurance Programme - LEAP) to 1.5 lakh people per year will be started through Local Self Government Institutions in the non-agrarian sector through local ventures. Under the programme, employment should be created at the rate of one person per thousand persons. This may be implemented through Kudumbashree, Co-operative Society, or Private Entrepreneurs. Initiatives such as non-plastic products, value-added farm products and other small-scale industries may be included in these initiatives.

Key issues hampering the education section in Kerala

4http://spb.kerala.gov.in/images/pdf/whats_new/Vol1_E.pdf

Kerala: Unravelling the Growth Trajectory 37

INCREASED FOCUS ON HEALTHCARE AND TOURISM

Public investment in health and education continues to yield results for a long period of time. The strong disease surveillance system in the state was demonstrated by the successful control and prevention of the spread of Nipah virus in May 2018. The suppression and control of epidemic disease in Kerala in the aftermath of the floods is also nothing short of a historic achievement.

To further strengthen the state’s prospects in healthcare, there are several projects on the anvil. These include:

• Life Sciences Park at Thiruvananthapuram with robust infrastructure facilities that will provide the first integrated approach to life science research to markets covering all segments such as agriculture, food and nutrition, human health, biotechnology, and medical technology. The first phase of the development is expected to ready by March 2021.

This Park will provide developed plots for large and integrated Bio-IT companies to set up their campuses and ready-to-use modular offices, wet and dry lab space for intermediate, small, and start-up companies.

• With great domestic and international connectivity, Kerala is also looking to strengthen its medical tourism by creating

investor-friendly policies for private players to enhance the establishment of a healthcare facility in various sectors.

Medical tourism holds immense potential in India. Thanks to the traditional Indian systems of medicines, i.e. Ayurveda, Yoga, Panchakarma, Rejuvenation Therapy, etc. As per the Medical Tourism Index Overall ranking, 2016, India is one of the preferred destinations for Medical Value Travel (MVT) as it occupies the fifth position among 41 major medical tourism destinations.

While the metropolitan cities of Delhi, Mumbai, Chennai, Bengaluru, Hyderabad, and Kolkata are preferred cites, Kerala is not far behind and handles about 5-7% of foreign patients5. With excellent connectivity, medical tourism has become one of the USPs of the state. Apart from modern and alternative treatment systems, Kerala also boasts of several Ayurveda centres.

Being at the forefront of Ayurvedic revolution, there are also plans to set up medicinal plant preservations and processing unit in the eastern side of Kollam district. Considering the growing demand for herbal products across the globe, Kerala is expected to attract companies in this space.

Healthcare

5India: Building Best Practices in Healthcare Services Globally

Kerala: Unravelling the Growth Trajectory38

Blessed with a diverse landscape and rich culture, Kerala is one of the most popular tourist destinations in the country. From mountain vistas to sprawling tea estates to backwaters to beaches, the state has it all. Kerala’s natural beauty and rich culture attract several domestic and foreign tourists every year.

The year 2018 witnessed 0.42% growth in foreign tourists’ arrival and over 6% growth in domestic tourists’ arrival. This led to an 8.60% increase in total revenue from the tourism industry. Post floods of July-August 2018, tourist flow disrupted temporarily.

Tourism

Tourist inflow comparison

with key states

Kerala accounts for only 1% of the overall tourism in India. Compared to other states which are also driven by tourism, Rajasthan’s contribution to the overall tourism of the country is the highest with a share of 3.1% tourist due to the presence of forts and palaces followed by Uttarakhand at 2.2%

majorly driven by pilgrimage tourism. Tourism which is the key sector for Kerala has a miniscule contribution to the overall tourism of the country. The state has immense potential due to its location and geography to attract more tourists to it and increase its share in the Indian tourism.

Kerala16,701,068

Uttarakhand36,852,204

Goa8,015,400

Rajasthan51,989,991

Himachal Pradesh

16,450,503

3.1%

0.5%

2.2%

1%

1%

Tourism Inflow (2018)

Share of Indian Tourism

Source: Each states’ Ministry of Tourism, ANAROCK Research

Kerala: Unravelling the Growth Trajectory 39

Foreign exchange earnings from tourism have shown a steady growth over the years. In 2018, Kerala earned INR 8,764.46 crore

as foreign exchange earnings from tourism against INR 8,392.11 crore in the year 2017, recording a growth of 4.44%.

Total revenue generated from tourism during 2008 to 2018

The tourism sector has the potential to earn foreign exchange, create employment opportunities and act as a significant driver of economic development, the government initiated several measures to promote tourism, which has also won the state several accolades. Here, it is imperative to mention

the huge contribution of houseboats to the State’s tourism. Several unnoticed villages of Alappuzha have seen rapid development as its picturesque backwaters, lagoons, wetlands and freshwater rivers grabbed international attention.

Foreign Exchange Earnings (FEE) Continues to Grow

Source: Economic Review 2018, Kerala State Planning Board

Source: Kerala Tourism Statistics, ANAROCK Research

0

10,000

20,000

30,000

40,000

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Tota

l Rev

enue

(in

INR

cro

re)

YEAR

FOREIGN EXCHANGE EARNINGS)INR CRORE)

% OF INCREASE

EARNINGS FROM DOMESTIC TOURISTS

TOTAL REVENUE GENERATED FROM TOURISM (DIRECT & INDIRECT) (INR CRORE)

% OF INCREASE

2014 6,398.93 15.07 12,981.91 24,885.44 12.11

2015 6,949.88 8.61 13,836.78 26,689.63 7.25

2016 7,749.51 11.51 15,348.64 29,658.56 11.12

2017 8,392.11 8.29 17,608.22 33,383.68 12.56

2018 8,764.46 4.44 19,474.62 36,258.01 8.61

To further boost the sector, the government also has several plans on the anvil. For the FY 2020-21, INR 320 crore has been allocated for tourism development.

It must be noted that Kerala tourism has overcome two flood ravages. Effective marketing has played a vital role in this. The state government has constantly been focusing on Tourism Marketing. In 2017-18,

INR 75 crore was allocated for marketing, which increased to INR 82 crore in 2018-19.

The government also plans to commission the Muziris Heritage project in 2020-21, which is to reinstate the historical and cultural significance of the legendary port of Muziris. The entire project is designed to involve and integrate the local community in all intended developmental initiatives.

Kerala: Unravelling the Growth Trajectory40

Besides the four international airports, Kerala may soon have a string of airstrips-heliports, which can operate small, single-engine aircraft connecting major tourist destinations.

The airstrip-heliports would be set up at Ashramam maidan in Kollam, Munnar,

Thekkadi, Kalpetta, Bekal, Guruvayur, Palakkad, Alappuzha beach, Varkala, and Kumarakom. The state government has requested the Centre to include the proposed airstrips under its Regional Connectivity Scheme-UDAN to operate them as feeder ports of the international airports.

To further give a boost to the sectors, the State can focus on:

• As tourism contributes about 16-17% to the Kerala’s economy, the state government should ensure measures to sustain tourism growth by making Kerala a safer destination for tourists to visit. The continual outbreak of various diseases could impact this growth.

• Eco-friendly tourism that offers tourists world-class recreation facilities.

• Unlocking the potential of medical tourism with a special focus on traditional Indian systems of medicines.

• To boost domestic and intra-state connectivity, the government must push

for airstrips-heliports under the UDAN scheme.

• Being in the coastal region, the state can also explore connectivity via waterways to various cities of India and other nations.

• Currently, only Kannur has a drive-in beach in the State, which is the longest drive-in beach in India and a big tourist attraction. The government can also focus on developing a few more drive-in beaches.

• Lastly, Kerala can also emulate the success of Goa in water sports.

MAPPING THE START-UP ECOSYSTEM IN KERALAKerala is one of the most literate and skilled states in India. Schools, colleges, startup incubators, and government institutes have

been linked efficiently and the ecosystem provides an opportunity for the growth of entrepreneurship and innovation.

DID YOU KNOW?

2,200 Startups in Kerala

Out of which 36% in Kochi6US$ 44 Million

FundingRaised by 13 startups in 20197

230Innovation & Entrepreneurship Development Centres 40+ Incubators &

Accelerators8

Kerala ranked among top 5 performers with Gujarat, Karnataka, Odisha & Rajasthan9

1.8 lakh sq ft10

integrated startup complex recently opened in Kochi

6The State of Kerala Startup Ecosystem 20197The State of Kerala Startup Ecosystem 20198The State of Kerala Startup Ecosystem 2019

9State-wise Startup Ranking 2018 by Department for Promotion of Industry & Internal Trade (DPIIT)10The State of Kerala Startup Ecosystem 2019

Kerala: Unravelling the Growth Trajectory 41

• Kerala has 38% self-employed workforce which is less as compared to the India average.

• The state has the highest literacy rate in India but has 40% of unskilled workers which is higher than the India average.

• Nearly 43% of the population in the state is educated to the secondary level and above, which is higher than the India average of 32%.

• High unskilled labour cost in the State compared to other states restricting businesses to enter the state.

As stated above, currently Kerala has 2,200 startups and many more entrepreneurs are looking to join the growth story. Relatively low cost of operations, availability of skilled manpower and modern technology, and supportive state government policies are some of the key factors providing momentum to the startups here.

The government initiated the startup movement through Kerala Startup Mission

(KSUM) by forging and implementing forward-looking policies for creating a vibrant startup ecosystem. In January 2019, the government opened an integrated startup complex in Kochi, spread over 1.8 lakh sq. ft. Three more projects of such magnitude are in the pipeline which will increase the capacity to 5 lakh sq. ft after completion.

Does Kerala check all boxes for a thriving startup ecosystem?

KERALA (2012) INDIA (2012)

Workers by sector (%) *

Agriculture 26 49

Industry 32 24

Services 43 27

Workers by wage-type (%)

Self-employed 38 52

Salaried 22 18

Casual Wage 40 30

Literacy (%) 94 70

Secondary education and above (%) 43 32

Worker categorisation of state

Note: *Any discrepancy in total figure is due to round-offSource: The State of Kerala Startup Ecosystem 2019

Statewise Wages for Unskilled Labour in India

STATEMINIMUM WAGE (INR/DAY)

MAXIMUM WAGE (INR/DAY)

Maharashtra 96 248

Andra Pradesh 69 232

Gujarat 100 169

Kerala 110 322

Karnataka 83 228

Tamil Nadu 82 222

Note: The above wages excludes Variable Dearness Allowance (VDA)Source: 44th Session of The Indian Labour Conference

Labour cost which acts as the backbone of the construction and manufacturing industry in Kerala is the highest compared to its other counterparts in the country. With the minimum average rage of INR 110/day to INR 322/day, it acts as a hindrance for new players to come and setup base in the city. From the employees perspective, Kerala is the best state to work but looking at the high wage rates, the employers become reluctant towards setting up a base in the state and focus on low cost states like Gujarat, Maharashtra, etc.

Kerala: Unravelling the Growth Trajectory42

• Nearly 59% of Kerala’s startups have their headquarters in Ernakulam and Thiruvananthapuram districts.

• Kochi is the financial capital of Kerala which hosts majority of the startups in Ernakulam district.

• Thiruvananthapuram is the capital of Kerala which hosts majority of the startups in Thiruvananthapuram district.

• Home to Indian Institute of Management and National Institute of Technology, Kozhikode is emerging as a preferred destination for startups in recent years. The city is home to nearly 10% of the startups in 2019 compared to 6% a year earlier.

• Startups are providing employment opportunities across the state. These opportunities are expected to grow with the increase in the number of startups.

Startups’ Presence Across Kerala

Kasaragod1%

Cannanore2%

Kozhikode10%

Malappuram3%

Palghat2%

Trichur5%

Ernakulam36%

Idukki0.9%

Kottayam3%

Pathanamthitta0.7%

Quilon3%

Trivandrum23%

Alleppey2%

Wayanad0.5%

Source: The State of Kerala Startup Ecosystem 2019

Kerala: Unravelling the Growth Trajectory42

Map

no

t to

sca

le. F

or

rep

rese

ntat

ion

pur

po

se o

nly.

Kerala: Unravelling the Growth Trajectory 43

The state witnessed significant increase in funding in 2018 and 2019 compared to previous years. This could be because KSUM hosted various events such as Startup India Yatra, Next Big Idea, Design Kerala Summit during 2018 and before. KSUM’s efforts have also facilitated Kerala to achieve the rank of the top performer in the State Startup Ranking 2018. In 2019 (Jan-Sept), startups

in the state witnessed an increase of 18% in funding compared to 2018. Startups secured nearly US$ 44 million in funding spread across 13 deals in 2019 (Jan-Sept). Unicorn India Ventures, India Angel Network Fund, Malabar Angels, Sea Fund, Jose Pattara and Flat6Labs Bahrain are some of the top investors who invested in startups in Kerala.

Engine Oil for Startups – Investment Overview

Source: The State of Kerala Startup Ecosystem 2019

0

5

10

15

20

25

0

10

20

30

40

50

2014 2015 2016 2017 2018 2019 (Jan-Sep)N

umb

er o

f d

eals

Tota

l fun

din

g (

mill

ion

US$

)

Total Funding (US$) Number of deals

Kerala: Unravelling the Growth Trajectory 43

Kerala: Unravelling the Growth Trajectory44

KERALA STARTUP MISSION’S ROLE IN CREATING A VIBRANT STARTUP ECOSYSTEM

KSUM organizes various programs and events to promote entrepreneurship in the state. Some of them are as follows: -

Future Sparks

• To identify and motivate innovative minds among school students of age groups 13-17.

• Conduct workshops and seminars to introduce students to emerging technologies such as artificial intelligence, machine learning, robotics, augmented reality, virtual reality and more.

Innovation & Entrepreneurship Development Centres (IEDCs)

• Mini incubators: Aspiring entrepreneurs go through a network of IEDCs in professional colleges, where mini incubators enable students to work on prototypes. This helps them to imbibe the entrepreneurial spirit during the early days of career.

• Idea Fest: To promote the culture of innovation and entrepreneurship at state-based colleges and other educational institutions.

• INSPIRE’19: A learning program where IEDC student coordinators brainstorm, discuss and create awareness on IEDC, Idea Fest and the importance of entrepreneurship.

• Accreditation Bonus Report: Financial incentives for top-performing IEDCs.

IEDCs in Kerala230 Startups built

through IEDCs316

Events organised in IEDCs1,321

Kerala: Unravelling the Growth Trajectory44

Kerala: Unravelling the Growth Trajectory 45

• The Kerala Startup Mission (KSUM) is the nodal agency of the government of Kerala for promoting entrepreneurship in the state. It is also the implementing body for the Kerala Technology Startup Policy that supports the state’s startup ecosystem.

• It provides different types of funding such as seed funding, early-stage equity funding, patent support scheme, R&D grant, marketing support to startups.

• It has earmarked more than INR 1,000 crore over the period of next four years to provide early-stage funding to startups through Alternate Investment Funds.

OBJECTIVES

MIT FabLabs

• Fabrication Laboratories (FabLabs) are a technical prototyping platform, where people can design and build their own technology for personal or commercial use. Currently, they comprise of roughly US$ 50,000 in equipment and materials.

• One-day workshops are conducted every weekend to provide a basic understanding of the procedure and technology.

K-Accelerator Program

• Designed to provide national-level exposure to startups who have started gaining traction.

State Startup Events

• Kerala organizes various events such as Startup India Yatra, Data Innovation Challenge, Startup Weekend Women to promote startups in India.

Kerala: Unravelling the Growth Trajectory 45

Kerala: Unravelling the Growth Trajectory46

Government initiatives such as KSUM paved the path for startups in the state by providing them a sustainable environment, but the availability of funds and skilled workforce remains a challenge that is expected to ease out in the future.

Although DPIIT ranked Kerala as one of the top performers in the State’s Startup Ranking 2018, there are many challenges that remain unaddressed. Maharashtra tops the chart with 2,587 recognized startups (which are registered under Startup India Scheme) whereas Karnataka secured the second position with 1,973 recognized startups. Despite the early launch of startup policy as compared to Maharashtra and Karnataka, Kerala only has 461 recognized startups. The

state notified its own startup policy even before the launch of the Startup India scheme in January 2016, but effective implementation remained a constraint. A comparison of the policies of these states reveal that Kerala could benefit from the first mover advantage. The vision was to create an entrepreneurial environment that will promote economic activities and create employment. In this respect, the state has made limited progress so far.

Kerala, Maharashtra & Karnataka: A quick comparison

Kerala has an unemployment rate of 11.4% which is higher than the Indian average of 6.1%. The workforce must update their skillsets for the present opportunities that may arise in the industrial or services sectors. These may require skills relating to operating machines and tools in factories or digital

capabilities that are likely to be generated from technological disruptions. The state also has ports and physical infrastructure in place to support the growth of startups, but effective implementation of policies and availability of funds remains a challenge.

KERALA MAHARASHTRA KARNATAKA

Launch Year - Startup Policy 2014 2018 2016

Recognized Startups* 461 2,587 1,973

Startup Portal Yes Yes Yes

Unemployment Rate 11.4% 4.9% 4.8%

Ports for Import/Export Yes Yes Yes

Presence of IT-ITeS companies Limited Prominent Prominent

Note: * Data till 2018Source: Periodic Labour Force Survey (2017-18), State’s Startup Ranking 2018

Kerala: Unravelling the Growth Trajectory 47

POLICY INITIATIVES TO ENHANCE EASE OF DOING BUSINESS IN KERALA The vision of the Industrial Policy 2018 is to transform Kerala into a vibrant investment destination with an effervescent entrepreneurial society through inclusive, eco-friendly, and sustainable economic growth with the creation of employment opportunities at reasonable wages.

In 2017, the State held an unimpressive rank of 21, lowest among the southern states. While Andhra Pradesh retained its first spot, Kerala slipped from 20 in 2016 to 21 in 2017. While the score showed some improvement on the back of several reforms, they were not enough to improve the state’s ranking in comparison to other states.

The Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce and Industry, in partnership with the World Bank Group, released the Business Reform Action Plan (BRAP) 2017. The BRAP included 405 recommendations for reforms on regulatory processes, policies, practices, and procedures spread across 12 reform areas, that is, labour regulation enablers, contract enforcement, registering property, inspection reform enablers, single window system; land availability and allotment; construction permit enablers, environmental registration enablers, obtaining utility permits, paying taxes, access to information and transparency enablers and sector-specific reforms spanning the lifecycle of a typical business.

The score was then calculated on the basis of reform implementation and investor feedback. Andhra Pradesh scored 99.73% on reform implementation and 86.50% on investor feedback, clearly indicating the faith of investors.

STATES/UNION TERRITORIES

2015 2016 2017

SCORE RANK SCORE RANK SCORE RANK

Andhra Pradesh 70.12 2 98.78 1 98.30 1

Gujarat 71.14 1 98.21 3 97.99 5

Karnataka 48.50 9 88.39 13 96.42 8

Kerala 22.87 18 26.97 20 44.82 21

Maharashtra 49.43 8 92.86 10 92.88 13

Tamil Nadu 44.58 12 62.80 18 90.68 15

Telangana 42.45 13 98.78 1 98.28 2

Source: State-wise Ease of Doing Business Rank, RBI

Kerala aims to become one of the top 10 ranking states in the country as far as Ease of Doing Business is

concerned.

Kerala: Unravelling the Growth Trajectory48

Over the last two years, the state government initiated earnest reforms to improve the business environment11. These include:

• Kerala Single Window Interface for Fast and Transparent Clearance (K-SWIFT), focusing on industrial buildings, is a platform for all future transactions with the government on the issue of granting licenses and approvals in a time-bound manner.

• Invest Kerala Portal, which is a single-window facilitator for investment promotion for prospective and aspiring investors. Currently, the portal has over 100 projects profile.

• Intelligent Building Plan Management System (IBPMS), which provides single point, integrated and holistic online development permissions to applications within the specified timelines.

• The Kerala Micro Small Medium Enterprises Facilitation Act, 2019 to grant automatic approval for investments up to INR 10 crore.

Clearly, the intent of the state government behind these reforms is accurate, but the slow implementation has resulted in the declining rank of EoDB. However, it will be interesting to see if these reforms positively benefit Kerala’s rank in subsequent years.

For 2019, according to the Department for Promotion of Industry and External Trade, there are 187 reforms in nine broad categories. These include access to information and transparency enablers, availability of land, environmental registration enablers, obtaining electricity connection, labour regulation enablers, single-window clearance, environmental registration enablers, sector-specific, and land administration and transfer of land and property. The below table indicates the present status.

STATES/UNION TERRITORIES

TOTAL REFORMS

IMPLEMENTATION STATUS

YES NO

Andhra Pradesh

187

187 Nil

Gujarat 187 Nil

Karnataka 187 Nil

Kerala 157 28

* Data till 2018Source: Department for Promotion of Industry and Internal Trade

Ease of Doing Business 2019 status

11http://invest.kerala.gov.in/ease-of-doing-business/

Kerala: Unravelling the Growth Trajectory48

Kerala: Unravelling the Growth Trajectory 49

While Andhra Pradesh, Gujarat, and Karnataka have already implemented all 187 reforms across categories, Kerala is

still lagging. The State is lagging behind on the following categories with the following number of reforms in each category:

Access to Information and Transparency Enablers - 7

Single Window System - 1

Obtaining Electricity Connection - 1

Commercial Dispute Resolution Enablers - 8

Land Availability and Allotment - 2

Construction Permit Enablers - 1

Land administration and Transfer of Land and Property - 1

Labour Regulation-Enablers - 6

Paying Taxes - 1

Kerala: Unravelling the Growth Trajectory 49

Kerala: Unravelling the Growth Trajectory50

NRI REMITTANCES: THE BACKBONE OF KERALA’S ECONOMYIndia retained top position worldwide in inward remittances with approximately US$ 82 billion12 which is 2.8% of India’s 2019 GDP. Kerala accounted for nearly 19%13 of the total inward remittances, which is the highest in India. However, Kerala does not send even half as many migrants (low-skilled workers requiring emigration check) overseas as Uttar Pradesh but has the biggest share of remittances. This phenomenon is perhaps due to qualified and skilled people moving out to other countries for employment as Kerala offers limited opportunities to engage its talent pool in productive and remunerative economic activities.

As per the data of State Level Bankers Committee, the total bank deposits in Kerala as of March 2018 amounted to INR 445,401 crore14 out of which NRI deposit accounted for 38%. Although NRI deposits have grown by 11.5% in the past one year to INR 169,944

crore15, the share in total deposits has been range-bound since 2016. However, the share of NRI deposits in total deposits have increased to 38% in 2018 from 23% in 2011. This shows the increased dependability of Kerala’s economy on NRIs.

Dependability of Kerala’s economy on NRIs has increased over time which can be a cause of concern. The government must look at other alternates and facilitate the growth of services and manufacturing industry in the state to generate revenue and employment.

19.0%

16.7%

15.0%8.0%

5.9%35

.4%

Inward Remittances

(2016-17)

Kerala

Maharashtra

Karnataka

Tamil Nadu

Delhi

Others

Source: Reserve Bank of India

Source: State Level Bankers Committee Report, Economic Review 2018

Dep

osi

ts (

INR

Cro

re)

20%

25%

30%

35%

40%

0

20,000

40,000

60,000

80,000

1,00,000

1,20,000

1,40,000

1,60,000

1,80,000

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

% S

hare

NRI deposit % share in total deposits

28%

26%

23%25%

29%

34%34%

38% 37%38%

NRI bank deposits in Kerala

12World Bank, Estimated data as of April 201913Reserve Bank of India, Data for 2018

14Economic Review 201815Economic Review 2018

Kerala: Unravelling the Growth Trajectory 51

KERALA SWOT

• Constantly expanding economy

• Highest literacy rate in India

• Per capita income (at current prices) of INR 199,101 in 2017-18 (quick estimates) and has been growing constantly over the six years. And nearly 55% more than that of India

• Highest Inward remittance in the country at 19%

• Tourism is among the major contributors to the state economy accounting for 15-17%

• Long coastline, presence of multiple beaches, wildlife sanctuaries, etc and presence of major ports for trade

• Ranks first in education and empowerment index

Strengths

• High level of unemployment in spite of highest literacy rate in the country

• Low Foreign Direct Investments in the state

• Low participation of start-ups and IT-ITeS sectors

• High cost of daily wages for the agricultural and non-agricultural workers

• Low focus on public utilities and services

Weaknesses

• Housing and real estate as evident from the increasing expenditure of the individuals on these assets

• Presence of several local micro finance and NBFC companies

• Warehousing and logistics sector distribute the agricultural and maritime produce

• Emphasis on the industry to promote manufacturing

Opportunities

• Unorganised financial services sector

• High dependence on foreign remittances may affect the state if global economic crisis re surfaces

• Government needs to actively pursue the development programs to improve the EoDB rank

• Competition from organised financial services companies

Threats

Kerala: Unravelling the Growth Trajectory52

The Real Estate Sector and the Future Possibilities4

Kerala: Unravelling the Growth Trajectory52

Kerala: Unravelling the Growth Trajectory 53Kerala: Unravelling the Growth Trajectory 53

REAL ESTATE SECTOR OF KERALA: UNTAPPED POTENTIAL Kerala accounts for 2.76% of India’s population16, but its economy at current prices contributed nearly 4% to the national Gross Domestic Product (GDP) during the

year 2017-18 (quick estimate)17. Thus, Kerala’s per capita income at the current price stood at approximately INR 1.8 lakh which was 53% higher than India’s average18 in 2017-18.

Real estate contributes significantly to the Gross State Value Added (GSVA) of the state. Nearly INR 980.2 billion has been contributed to the GSVA of the state in 2017-18, which has increased at a CAGR of 15.08% since 2011-1219.

As per the Kerala Migration Survey 2018, nearly 4.9% of the NRI remittances in Kerala were used for purchasing a house and

purchasing/improving a land whereas around 5.8% used to repair a house. Thus, the share of pucca houses in the state has increased to 83.5% in 2011 as compared to only 55.97% in 1991. The share of kutcha houses reduced significantly to 2.6% from 24.9% in the same period. The share of pucca houses in the state was more than the India’s average in 2011.

Source: Department of Economics and Statistics Kerala, 2019

Source: Ministry of Housing and Urban Affairs

Percentage contribution of Real Estate, Ownership of Dwelling & Professional Services Sector

2011-12 2017-18 (QUICK ESTIMATE)

% contribution to Kerala GSVA 12.55% 16.06%

% contribution to India GVA 12.96% 15.57%

1991 2001 2011

PU

CC

A

HO

USE

(%

)

SEM

I-P

UC

CA

H

OU

SE (

%)

KU

TCH

A

HO

USE

(%

)

PU

CC

A

HO

USE

(%

)

SEM

I-P

UC

CA

H

OU

SE (

%)

KU

TCH

A

HO

USE

(%

)

PU

CC

A

HO

USE

(%

)

SEM

I-P

UC

CA

H

OU

SE (

%)

KU

TCH

A

HO

USE

(%

)

Kerala 55.97 19.13 24.90 68.16 21.00 10.24 83.50 12.70 2.60

All India 41.61 30.95 27.44 51.62 30.14 18.24 61.90 25.10 12.00

16Census 201117Department of Economics and Statistics Kerala, 201918Department of Economics and Statistics Kerala, 201919Department of Economics and Statistics Kerala, 2019

Kerala: Unravelling the Growth Trajectory54

Kochi & Thiruvananthapuram – Residential Price Trends

Kochi witnessed a price correction of under construction properties

Prices of under construction properties in Thiruvananthapuram remained stable in last one year

• Composite Housing Price Index for under construction properties has witnessed a dip of 4% in June 2019 as compared to the same period last year.

• Prices of properties in the size range of under 60 sq. mtr. and more than 110 sq.

mtr. declined in the range of 6%-7% in the same period.

• Prices of properties in the size range of 60-100 sq. mtr. have increased by 6% in the same period.

• Composite Hosing Price Index for under construction properties has remained stable in June 2019 as compared to June 2018.

• Prices of properties in the size range of under 60 sq. mtr. declined by 6% in the same period.

• Prices of properties in the size range of more than 60 sq. mtr. have remained stable.

4,000

6,000

8,000

10,000

12,000

Jun'18 Sep'18 Dec'18 Mar'19 Jun'19

Pri

ces

on

Car

pet

Are

a (I

NR

/sq

ft)

<=60 sq mtr 60 sq mtr - 110 sq mtr >110 sq mtr

Kochi - HPI@Market Prices for Under Construction Properties

Thiruvananthapuram - HPI@Market Prices for Under Construction Properties

Source: National Housing Bank, Data as on 13th February 2020

Source: National Housing Bank, Data as on 13th February 2020

5,000

5,500

6,000

6,500

7,000

7,500

8,000

Jun'18 Sep'18 Dec'18 Mar'19 Jun'19

Pri

ces

on

Car

pet

Are

a (I

NR

/sq

ft)

<=60 sq mtr 60 sq mtr - 110 sq mtr >110 sq mtr

Kerala: Unravelling the Growth Trajectory54

Kerala: Unravelling the Growth Trajectory 55

Real Estate ProjectsScenario in Kerala

Status of Real Estate Projects

Kochi district is the epicenter for real estate development in Kerala state. Nearly 45% of the overall projects in Kerala are focused towards Kochi, being the economic hub of the state. The micro markets in the city have seen majority of traction by real estate developers in the past. Thiruvananthapuram and Thrissur are the next 2 big destinations with real estate activities in the state.

Currently, as the global economy faces a slowdown, Kerala which is highly dependent on NRI remittances is the most impacted state in India. It is an opportunity for the developer’s fraternity to look beyond residential and commercial real estate and develop the low-density cities with alternate housing class such as vacation/holiday homes and so on and ensure a consistent inflow of funds and beat the slowdown.

Kochi and Thiruvananthapuram are the prominent cities of Kerala which witness majority of the real estate developments. Kochi witnessed an increase in prices for properties in the size range of 60-100 sq. mtr owing to higher demand in this size range. Residential assets in these size ranges feature under central government’s subsidy schemes

to promote affordable housing through tax incentives and interest subventions.

The prices of residential asset went downhill post floods in 2018. While the prices were quick to recover in certain segments in both the cities, Thiruvananthapuram recorded stable prices for the past one year.

Source: Shared by CREDAI Kochi, Compiled by ANAROCK Research

Kasaragod

Cannanore2%

Kozhikode8%

Malappuram1%

Palghat3%

Trichur16%

Ernakulam45%

Idukki

Kottayam4%

Pathanamthitta2%

Quilon

Trivandrum19%

Alleppey

Wayanad

0% 20% 40% 60% 80% 100%

Trivandrum

Ernakulam

Calicut

Kottayam

Thrissur

Kannur

Kollam

Pathanamthitta

Malapuram

Alleppey

Palakkad

Kasaragod

Idukki

Wayanad

Kerala

Completed Under-construction Upcoming

Map not to scale. For representation purpose only.

Kerala: Unravelling the Growth Trajectory 55

Kerala: Unravelling the Growth Trajectory56

Kerala government’s initiatives to promote commercial and residential developments across the state are expected to create a roadmap for the growth of the sector. A few of these steps are listed below:

• Pradhan Mantri Awas Yojana (PMAY) – The state is expected to get the benefit of central government scheme to promote affordable housing. That’s because the state has 40% unskilled workforce which can participate in the growth of the affordable housing sector.

• Smart City Mission – Kochi and Thiruvananthapuram have been selected to be developed as smart cities under the Smart City Mission of the central government. These cities are expected to see increased real estate activities in the future.

• Conversion of government’s prime land parcels into freehold – Smart City Kochi, a joint venture company of the Kerala

Govt. and Dubai Holding, has decided to convert around 30 acres of land into freehold to unlock potential for prime real estate developments in the city.

• Kerala Industrial & Commercial Policy 2018 – The launch of the policy is expected to promote industrial developments across the state.

• Diaspora investment company – The government has planned to set up a diaspora investment company with a 74% stake of non-resident Keralites and a 26% government stake to fund infrastructure projects and NRI townships in the state.

• Real Estate Regulatory Authority – The recent notification of the real estate authority in the state was a step in the right direction. It is expected to usher transparency in the sector which is necessary to lure the NRI investments.

Kerala has around 10% of the stamp duty and registration charges on the sale of the property which is higher than majority of the states in India. Neighbouring states such as Andhra Pradesh, Telangana and

Karnataka have the charges in the range of 6% to 7% only. A competitive stamp duty and registration charges by the government of Kerala is likely to provide impetus to the real estate sector.

STATE DESCRIPTION STAMP DUTY ON SALE DEED (%)

REGISTRATION CHARGES (%)

TRANSFER FEE (%)

Andhra Pradesh Agreement of sale 5.0% 0.5% 1.5%

Telangana Apartments/Flats including semi-finished in all areas 4.0% 0.5% 1.5%

Tamil Nadu Conveyance (Sale) 7.0% 1.0% -

Kerala

Sale deed (property situated within the areas of Municipalities/Townships/Cantonments/Panchayath)

8.0% 2.0% -

Karnataka

Agreement of sale of immovable property (Possession given/agree to be given)

5.6% 1.0% -

Maharashtra Sale deed 4.0% - 6.5% 1% or INR 30,000 (whichever is less) -

Stamp duty charges on Real Estate Industry

Note: The data is compiled from official websites of the states; Extracted on 26th Feb 2020.Source: Compiled by ANAROCK Research

Initiatives taken by Kerala Government to promote Real Estate in the state

Kerala: Unravelling the Growth Trajectory 57

Kerala was amongst the last states to notify RERA which impacted the real estate developments adversely. Neighbouring states such as Karnataka, Telangana and Tamil Nadu

have an early movers’ advantage. Kerala has had to accelerate the RERA implementation process to restore the faith of buyers into the sector.

STATE GENERAL RULES

ESTABLISHMENTOF REGULATORYAUTHORITY

ESTABLISHMENTOF APPELLATETRIBUNAL

WEBPORTAL

REGISTERED PROJECTS

Kerala Notified Permanent Not Established Setup 05

Maharashtra Notified Permanent Permanent Setup 24,264

Telangana Notified Interim Interim Setup 1,634

Karnataka Notified Permanent Permanent Setup 3,253

Tamil Nadu Notified Permanent Permanent Setup 1,395

RERA Implementation Report Card

Source: Ministry of Housing and Urban Affairs; Data as on 8th February 2020

The contribution of NRIs to the economy of Kerala is remarkable which can be utilized for the development of the real estate sector. With the growing IT sector and physical infrastructure, the real estate sector has the potential to attract NRI investments. Special schemes for NRIs and marketing campaigns in other countries can also help to raise NRI investments in the sector.

Kerala: Unravelling the Growth Trajectory58

KERALA REAL ESTATE SECTOR SWOT

• Established permanent RERA authority.

• Established tech parks offering quality space for the IT-ITeS industry.

• Well established tourism real estate (RE) in the state attracting multiple branded hotel chains to set up base in the state.

• Presence of Prominent Educational Institutions in the state.

• Low debt exposure of the developers improving the financial credibility.

Strengths

• Limited presence of branded national level developers in Kerala across the residential and commercial asset class.

• Locally focused developers. Lack of multi-city/state presence of the developer’s fraternity.

• One of the last states in India to notify RERA. Only 5 projects registered so far.

• High stamp duty and registration charges. Cumulative charges at nearly 10% of the overall sale deed.

• Stamp duty and registration charge the same across urban and rural areas.

• Unavailability of labour in the state.

• Highest wages for unskilled labour in the state.

• High migration rate in Kerala and high dependence on NRI remittances.

• Slow adoption of advanced construction technology by the developer’s fraternity.

• High land cost due to absence of urban and rural divide.

• Lesser floating population from other states.

• Inadequate basic facilities like water and sewerage treatment.

• Government restricted the conversion of wetlands by introducing the new Conversion of Wetland and Paddy Land Act in 2008.

Weaknesses

• Change in CRZ rules to unlock options for new developments for hospitality and other core asset classes of real estate.

• Demographics and high presence of educational institutions to provide an opportunity for alternate asset class

development such as Student Housing and Senior Living.

• Using modern construction technology to significantly bring down the construction cost

Opportunities

• Natural calamities act as a threat to the real estate sector in Kerala.

• Sudden change in the coastal rules acts as a major hindrance to RE developments in the state.

• Gulf crisis continues to haunt Kerala’s economy.

Threats

Ministry of Housing and Urban Affairs; Data as on 8th February 2020

Kerala: Unravelling the Growth Trajectory 59

New-age construction technologies: changing the way you build

Construction technology collectively refers to the deployment of innovative tools, machinery, technology, and manpower used during the construction phase of any project. New-age construction technologies enable strength, precision, quality, and timeliness in the project execution. Today, several semi-automated and automated construction equipment are being used to increase the pace of construction period without compromising on quality and safety. Through multiple research’s conducted by various agencies, the usage of construction technologies have resulted in achieving the below results:

• the adoption of proven technology can improve construction industry productivity by 30-45%, as well as improve material predictability and reliability.

• Even though the construction industry has not kept pace with the automation advancements that other industries adopted, automation has proven to be extremely effective in the reduction of cost and timelines without hampering the quality, safety and product.

• Electronic simulation has proven to be a very successful application for the industry improving constructability, maintainability, operability, quality, and safety while reducing cost and schedule of the overall structure.

• Other technologies adopted by the industry, such as Radio Frequency Identification (RFI), wireless and advanced building technologies have all provided industry benefits such as better quality, high productivity, enhanced reliability, less rework and improved inventory management.

For e.g.: RFID technology has multiple applications in the construction industry: Starting from Project management, Equipment and Tool management, Inventory management, Workforce management, etc. With effective planning and use the cost of development can be significantly reduced.

While the construction technologies have started to show beneficial results across the globe, adaptation of construction technology in India and especially Kerala is very low. In India, the usage of advanced construction technologies is limited to using ‘Mivan’ and other types of formworks.

In 2019, Kerala state government decided:

• To replace the conventional method of construction with prefabricated structures.

• Dependence on mining will reduce significantly with the replacement of construction method.

• The idea is to create and nurture an ecosystem to increase the speed of construction for all projects in Kerala

Considering that the state is hit by floods frequently and the redevelopment cost of the flood-affected areas is on a rise, this move is expected to effectively manage the redevelopment and also be cost-effective.

To change the mindset of developers still utilizing the brick and mortar construction technique, the state is unleashing a massive campaign for familiarizing and popularizing alternative building techniques that use fewer natural resources but provide more safety and comfort at an affordable cost.

However, construction and developer fraternity are still highly dependent on old construction techniques. Even though the use of clay bricks has reduced significantly over the last few years, but the usage of advanced techniques such as prefabrication is yet to be adopted by most of the developers in Kerala.

The pre-fabrication technology that can be widely adopted across various budget segment projects. But the maximum benefit can come for affordable (< INR 40 lakh) and mid-end budget segment (INR 40 lakh – INR 80 lakh) houses constructed with this technique. As the buyers for these budget segments are very price-sensitive, the usage of this technology can bring down the cost of projects by 20%+ and save around 50-

FUTURE POSSIBILITIES

Kerala: Unravelling the Growth Trajectory60

60% time of development as per industry estimates. The advantage of the technology is that every developer can outsource the prefabricated panels and save on setting up the technology inhouse.

Other budget segments can focus on pre-casting which will provide benefits up to the scale of 30-40%. Since, the initial setup cost of the pre-cast facility is high, the advantage of using such technology can be availed easily in large scale projects.

However, the developers are looking forward to the government to promote such techniques by offering incentives, as the adoption of these technologies in the initial phase is a little costly compared to the conventional methods. But, the usage of the same will not only help the business profiles but also the bottom-line of the profit & loss statement of them can significantly improve by self-adapting such techniques.

In Kerala, the adoption of construction technology is yet restricted to the usage of different building materials only, but across the globe, many new construction technologies are adopted to improve the

overall efficiency of the development. These include:

• 3D Volumetric Construction

• Precast Flat Panel Modules

• Tunnel Formwork System

• Flat Slabbing Technology

• Pre-cast Foundation Technique

• Hybrid Concrete Building Technique

• Thin Joint Masonry Technique

• Insulating Concrete Formwork (ICF) Technique

The expenditure on research and development (R&D) of newer construction technologies across the world is on a rise. As with the rising population, the need for new infrastructure and real estate developments is increasing rapidly. However, the R&D expenditure in India is only limited to premier institutes and the usage of new technologies is also limited to mega construction companies. With increased focus on R&D within India, we may be able to control the cost of adopting new technologies and its usage might increase.

Alternatives: An Untapped Opportunity for Kerala

The real estate sector in India has been facing a slowdown for the past 5-6 years, and specifically, the residential segment is still struggling to pick up pace. The sector is dealing with a liquidity crisis, non-serviceability of debt, low demand, slow capital value growth and several other issues. The time has come for the developer fraternity to think beyond the core established asset classes and increase their participation in the development of alternative asset classes.

While several alternative asset classes such as coworking, co-living, student housing, senior living and a few others have emerged in India, not all can be easily adopted in Kerala considering the current state of the affairs and overall cultural background.

Currently in Kerala there has seen immense development of commercial and residential assets for the limited demand the state has housing and office spaces. The government of Kerala has already been working on setting up a start-up park to support entrepreneurs. Nearly 1.8 lakh sq. ft. of the park has opened recently at Kochi. With start-ups being the major occupiers of coworking spaces, and with the government creating space for them to operate in the state, exploring the coworking asset class for the developers in Kerala may not be very fruitful.

On the other hand, key asset classes that the developers in Kerala can consider exploring include:

Senior Living Student Housing

Kerala: Unravelling the Growth Trajectory 61

• According to a study by the United Nations, the global population aged over 60 years more than doubled from 382 million in 1980 to 962 million in 2017. It is projected to reach 2.1 billion by 2050.

• Globally, the number of persons aged above 80 years is projected to rise more than three times from 137 million in 2017 to 425 million in 2050.

• The overall life expectancy in India has improved significantly from 41.4 years in 1960 to 62.5 years in 2000. Improved

healthcare systems and precautionary measures adopted have improved life expectancy to 68.8 years in 2018

• In India, the population aged above 60 years has already breached the 100 million mark and is expected to be over 500 million by the end of this century.

Rising life expectancy

India in the 21st century has a large population of senior citizens who are financially capable but are living alone and away from their family and children. These senior citizens also aspire for community living amidst modern amenities and an amicable environment that provides physical and medical support.

The concept of senior living in India has gained momentum since the turn of the century. Earlier the ingrained social norm was that it is the moral obligation of children to assume the responsibility of the ageing

parent. Old age homes were perceived as the last resort for older people as it came with the social stigma for the family.

Old age homes in earlier days run by charitable institutions provided shelter care to their inhabitants. Today the concept, assets and infrastructure have transformed significantly. Senior living properties today offer a unique mix of real estate, hospitality and healthcare. With rising life expectancy and higher disposable incomes, the concept of senior living has changed rapidly.

Senior Living

The world’s population is ageing. In almost every country, the population of people older than 60 years is seen to be growing continually. As populations grow older, it is

important to design and innovate policies and amenities specifically targeted towards the older generation.

Ageing World Population and Improving Life Expectancy Driving Demand

0

100

200

300

400

500

600

1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050 2060 2070 2080 2090 2100

60

+ P

op

ulat

ion

(in

mill

ion)

60+ Population of India

Note: Future periods are forecasted based on the current population age group of IndiaSource: United Nation, Department of Economics and Social Affairs

Kerala: Unravelling the Growth Trajectory62

Post the turn of the 21st century there has been an increasing awareness about the lives and rights of senior citizens in the country. Much of it was warranted due to the transformation of the social practices and trends such as the nuclear families gaining prominence and migration of younger generations to metros or other countries in search of livelihood.

The enactment of Maintenance and Welfare of Parents and Senior Citizens Act in 2007 mandated children to take care of their

parents in old age and the state governments to establish old age homes. As per industry estimates, the size of the senior living industry was estimated to be US$ 1.26 billion in 2016 and is likely to grow to US$ 7.7 billion in 2030. It is estimated to grow at a compounded rate of nearly 14% per annum during the period.

Nascent Segment with High Growth Potential

Industry estimates indicate that over 53% of the senior living projects are in the southern cities followed by western and northern regions accounting for 25% and 22% respectively. Bengaluru, Chennai, Hyderabad, Coimbatore, Mysore, and Puducherry are the key cities in the southern region that have emerged as their preference for post-retirement destinations. The key reasons for these cities to emerge as a retirement friendly destination are climate, environment and their connectivity with other parts of the country.

Since senior living is most prominent in South India due to the nature of the cities, and Kerala is currently untapped by this alternate class. Kerala as a state due to its climate and pollution-free environment coupled with dense forests, beaches and mountains can have better scope to develop such projects. As senior citizens would highly prefer a tropical climate, the state can offer the same across various districts.

Market Size of Senior Living Segment -India

Source: PHD Research Bureau, Survey of the senior housing sector in India, 2016-17

1,260

1,916

3,854

7,752

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

2016 2020 (E) 2025 (E) 2030 (E)

US$

Mill

ion

Kerala: Unravelling the Growth Trajectory 63Kerala: Unravelling the Growth Trajectory 63

Kerala: Unravelling the Growth Trajectory64

As the education landscape evolves in India, the country has witnessed a significant revolution in terms of the growing number of students. Currently, the country has over 37 million students20 enrolled in higher education21, which is more than double the size of student housing markets in the West. The government also expects to attract

200,000 international students22 to India, more than four times the current number. Kerala in India with many reputed institutes spread across multiple specialties can reap the maximum benefit from the move of central government if it enacts on it at the right time.

Student Housing

Every year, lakhs of students (Indian and international) migrate to various cities of India in pursuit of better educational opportunities. Among many other challenges, finding decent accommodation is the biggest concern for this migrant student population. Before we delve further, let’s look at some statistics.

At present, India has more than 37 million students23 enrolled in universities across the country. From 32.3 million in 2013-14, this number has increased to 37.4 million in 2018-19, an evident rise of 15.7%. Considering that 19% of India’s total population is aged between 15 and 24, these numbers are only expected to grow24.

The Growth Story of Higher Education in India

Kerala contributing nearly 10% nurses graduating as of 2010 as per International Mobility of Nurses from Kerala (India) to EU report by CARIM India and around 14 universities which has multiple institutes associated with them. The potential of student housing development in the state is immense. Apart from nursing, the state also has prominent institutes like IIM in its Kozhikode district. Additionally, international students

form an important demand generator for purpose-built student accommodation; considering they are unfamiliar with the local market and the language. In 2019-20 Budget speech, Finance Minister Nirmala Sitharaman announced several measures to strengthen the ‘Study in India’ campaign launched in 2018. The campaign focuses on bringing international students to India for premier education at affordable rates.

29

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36

37

38

2013-14 2014-15 2015-16 2016-17 2017-18 2018-19

No.

of

stud

ents

(in

mill

ion)

Growth in Student Enrolments

Source: AISHE (All India Survey on Higher Education) 2018-19

20AISHE (All India Survey on Higher Education) 2018-19, Ministry of Human Resource Development21According to All India Survey on Higher Education, higher education is defined as the education, which is obtained after completing 12 years of schooling or equivalent and is of the duration of at least nine months (full time) or after completing 10 years of schooling and is of the duration of at least 3 years. 22Industry estimates23AISHE (All India Survey on Higher Education) 2018-19, Ministry of Human Resource Development24http://mospi.nic.in/sites/default/files/publication_reports/Youth_in_India-2017.pdf

Kerala: Unravelling the Growth Trajectory 65

With the growing enrolment rate, the need for student housing has become all the more significant in the present times. While the majority of students prefer on-campus accommodation, limited availability and sub-standard living conditions compel them to look outside their college/university.

Currently, for over 37 million students, there are just over 6.54 million hostel beds , which is merely a little over 17.4%. Besides these,

many students also migrate to bigger cities to prepare for a variety of competitive exams, for which there is no substantial data, but this segment surely spikes up the requirement for more beds.

The Growing Need for Student Housing

As the economic development gets underway, there will be a demand for new and traditional real estate assets across the states. The need will be more pronounced in areas where commercial and economic activities are initiated. While these will create a demand for traditional real estate assets such as commercial, retail and residential, industrialization will open up avenues for warehousing and logistics.

The aging population and the rising student enrolments within the state are capable of unleashing the potential of several alternate real estate assets such as senior living and student housing.

Kerala: Unravelling the Growth Trajectory 65

Kerala: Unravelling the Growth Trajectory66

Key recommendations5

Kerala: Unravelling the Growth Trajectory66

Kerala: Unravelling the Growth Trajectory 67Kerala: Unravelling the Growth Trajectory 67

FOREIGN DIRECT INVESTMENT (FDI) AND EASE OF DOING BUSINESS (EoDB)

GROSS STATE DOMESTIC PRODUCT (GSPD)

FDI and EoDB Rank have a strong positive correlation. Improvement in EoDB has resulted in higher FDI inflows and vice versa. The size of the bubble represents GSDP of the state and is used only to depict the size of the economy.

In 2017, Maharashtra’s rank moved to 13th compared to 10th in the previous year. During

the same period, FDI inflows into the state also reduced by 35%. Karnataka stands out to be a winner which improved its EoDB rank to 8th from 13th in the above period. FDI inflows were seen to rise during the time by 287%.

Kerala’s rank moved down by one position in 2017 compared to the previous year. FDI inflows declined by 56% in the same period.

Improved EoDB rank and increased FDI inflows are likely to work as a catalyst for the growth of the GSDP. Meanwhile, Maharashtra has the highest GSDP amongst the comparable states considered for the analysis. It stands at INR 24,116 billion in 2017-18

which has increased by 10% compared to the previous year. Karnataka’s GSDP in 2017-18 increased by 12% to INR 13,503 billion. Kerala’s GSDP has also increased by 10% to INR 7,005 billion in the same period.

KeralaAndhraPradesh

Gujarat

Karnataka

Maharashtra

Tamil Nadu

-400

-200

0

200

400

600

800

1,000

1,200

1,400

1,600

0 2 4 6 8 10 12 14 16 18 20 22

FD

I (IN

R B

illio

n)

Ease of Doing Business Rank

State-wise Competitiveness (FY17 vs FY18)

FY17

FY18

Source: Reserve Bank of India, Department for Promotion of Industry and Internal TradeNotes: Size of the bubble represents GSDP at current prices in INR billionX-axis represents the Ease of Doing Business Rank for 2016 and 2017Y-axis represents FDI in INR billionKerala - FDI data for Kerala and LakshadweepMaharashtra - FDI data for Maharashtra, Dadra & Nagar Haveli, Daman & DiuTamil Nadu - FDI data for Tamil Nadu and Pondicherry

Kerala: Unravelling the Growth Trajectory68

RECOMMENDATION IMPACT

Focus on Real Estate sector

Push real estate developments

Development of real estate sector beyond residential will help in promoting entrepreneurship in the state as well. With lower land costs compared to its southern counterparts coupled with tourism from across the globe, Kerala may become the hub for many corporates and brands in India.

Adoption of construction technologies

Adopting advanced construction technologies in the real estate sector will help increase the development speed and at the same time lower the cost of development. The benefits can slowly be passed to the buyers by lowering the average capital values and boost sales

Focus on alternative real estate developments

Kerala is known to be ‘God’s Own Country’ due to its serene environment. The state needs to focus on developing alternate real estate assets such as student housing and senior living. The focus should also be to develop the warehousing and logistics industry in Kerala as the state enjoys a key position on the Suez route. With the central government’s focus on enhancing the warehousing and logistics industry, Kerala can reap benefits from it due to its strategic position and number of ports.

Marketing Kerala’s real estate beyond the state’s border

Kerala’s existing real estate can be promoted through various channels across the domestic and global markets through road shows and events. With concepts like homestays kicking in and high tourism inflow to the state, the sector may witness increase in sales.

Implementation of RERA act

RERA implementation in the state has been a key issue for many buyers. The central government’s aim is to increase transparency and increase buyer’s confidence in the sector. While Kerala has been one of the last states to notify the act, if the implementation is done in a fast-paced manner, the buyer sentiment will improve significantly

Focus on employment generation

The state with the highest literacy rates has the highest emigration rate as well in India. Majority of the emigration happening from Kerala is outside the Indian borders. If the government focuses on creating employment opportunities within the state, the migrations will be reduced, and the per capita income of the state also is likely to improve significantly

Increase dependence on domestic income

NRI bank deposits have increased from 23% in the year 2011 to 38% in the year 2018. As migration rate in Kerala is high, the remittances in Kerala are increasing. With the government improving the employment scenario of the state, the share of domestic bank deposits might exceed the NRI deposits and the dependence on NRI remittances for Kerala’s economy might reduce.

Promote Ayurvedic medical tourism

Kerala being rich in AYUSH medicine should promote alternate medicine in India and across the globe. With only 5-7% medical tourists in Kerala, promotion of AYUSH medicine will help Kerala increase its medical tourism share.

Host Kerala promotion eventsProposal to create an economic summit in Kerala, on the lines of Vibrant Gujarat Global Summit, to promote the state’s economy. Such events help the state in raising FDI and also promote the tourism and hospitality industry.

Promote IT-ITeS IT-ITeS industry is the backbone of South India’s economy. Replicating the same model in Kerala will help boost the consumption power of its residents. This can act as a booster to the state’s economy.

Promote Industrial Development Encourage new industries to be set up in the state. The industrial policy creates a conducive environment for new ventures that will favourably impact the economy.

Enabling Start-up environment Allow small and new entrepreneurs to develop their ideas and interests which will help in generating employment

TOP 8 RECOMMENDATIONS FOR IMMEDIATE TO MEDIUM TERM IMPACT ON KERALA’S ECONOMY

Kerala: Unravelling the Growth Trajectory 69

These 8 recommendations will provide immediate to medium term impact on Kerala’s economy. But for the state to flourish and continue to grow at a faster rate, the below mentioned recommendations should be implemented for long-term sustainable growth:

• Fastrack the establishment of diaspora investment company to fund infrastructure projects and NRI townships in the state.

• Focused research reports to showcase the state as a senior living destination.

• Dedicated committee/department to guide NRIs for their investments and returns.

• A portal to connect entrepreneurs, investors, mentors, industry players and academic institutions and foster knowledge exchange

• Development of sector hubs within the cities for the establishment of start-ups

• Conduct seminars to facilitate the communication between start-ups, investors and government departments

• Programs to update the skillsets of workforce

• Focus on increasing private equity investments in the state to flourish the growth of start-ups

• The budget allocation for the start-ups should be increased and stamp duty for starting a company should be reduced to attract companies.

• A big push is required from the government to create private employment as well to increase the income levels in the state.

• While there are over 50 media colleges in the state, there are not enough career opportunities in the field. The government should also focus on creating a hub for media and advertising companies to create job opportunities for media and journalism students.

Kerala: Unravelling the Growth Trajectory70

CREDAI ProfileConfederation of Real Estate Developers’ Associations of India (CREDAI) was established in 1999 with a mandate to pursue the cause of housing and habitat providers. It has grown its membership base since then and has more than 20,000 members today spread across 21 states and 220 city chapters.

On the advocacy side, CREDAI is today the preferred platform for National discourse on Housing and Habitat.

CREDAI is a knowledge-sharing network about the latest industry data, technology advancements and industry benchmarks for its members. CREDAI Conclave and CREDAI National Convention are both annual events held over two days each which showcase the latest technological, managerial and financial innovations in the real estate sector presented by leading authorities. These events draw close to 1000 developers, policy influencers and media persons and thus generate rich dialogues.

CREDAI continues to make a conscious effort in bringing Mission Transparency and to protect the interest of buyers. It is in this interest, CREDAI has established a Consumer Grievance Redressal Forum in October 2012, where an aggrieved buyer can register a complaint against CREDAI member developer. By translating investor interest protection into a mechanism, the apex body of real estate developers seeks to resolve consumer complaints expeditiously and promote bestselling practice amongst the developer fraternity. The forum in NCR alone has successfully resolved 3404 cases out of 3529 complaints registered (as in June 2019), with a success rate of 90% Customer Satisfaction. This is the first of its kind initiative, to align the faith of consumers with the member builders, to take up the case of grievances and implement self-regulation of the industry in terms of standards of delivery vis a vis commitment among present / prospective buyers, the government and the media.

CREDAI Youth Wing nurtures the next generation of CREDAI leadership by inculcating a social and ethical commitment. They are encouraged to participate in CSR activities of CREDAI towards this end.

CREDAI Women’s Wing encourages women professionals and entrepreneurs in the real estate sector.

CREDAI helps industries associated with the real estate to enlarge their presence and visibility through the Preferred Partnership Program.

CREDAI has imprinted the critical importance of real estate to the GDP of India on the minds of the government, policy makers and general public and has become the backbone of the Real Estate Industry.

Kerala: Unravelling the Growth Trajectory 71

CREDAI KeralaCREDAI Kerala has affiliated Chapters at Thiruvananthapuram, Kochi, Thrissur, Palakkad, and Kozhikode with about 170 Developers as members across the state. CREDAI Kerala, under the guidance and support of CREDAI National, has formulated guidelines and policies, and an ethical “Code of Conduct” for its members. CREDAI Kerala imbibes the national standards and values of CREDAI and works towards a more forward-looking and progressive Real Estate Industry in the state bringing in growth and betterment to both the members and their customers. CREDAI has launched MISSION TRANSPARENCY with the intent to inculcate “Transparent practices in business” by its members. CREDAI Kerala has also initiated the “Consumer Grievance Redressal Forum” in all the Chapters to address customer complaints.

CREDAI Kerala is also actively involved in CSR activities through its NGO “CREDAI Clean City Movement” in solving solid waste management issues in high rise apartments and is listed as the successful decentralized operational system by the Ministry of Housing & Urban Development Govt. of India. CCCM is the approved service provider to Suchitwa Mission, Govt. of Kerala. CREDAI has won several awards and accolades from the Govt. of Kerala and other social organizations for the commendable work put in this field.

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OUR AUTHORS: Virendra Joshi Ashim Bhanja Chowdhury Ravindra Kumar Kumawat Vice President Assistant Vice President Manager Research Research Research

Roubal Khorana Assistant Manager Research

OUR EDITOR: Archana Adnani Assistant Manager Research

For research services, Prashant Kumar Thakur please contact: Head of Research [email protected]

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